Living in today’s economic climate, it is impossible not to pay attention to the omnipresent inflation. Although the term rings round in the mouths of Poles, it is worth sorting out the basic knowledge of this process. In this article, you will learn how inflation is calculated and also what a basket of goods is and what it is needed for.

Inflation means what?

Inflation is meant the process of an increase in the general price level. The implementation of the word “general” in this definition is intended to show that if some products increase in value, while the value of other goods decreases, then we are not dealing with inflation. The mathematical illustration of this phenomenon is the average. Therefore, if the price level of a significant proportion of goods increases or decreases, then and only then is this reflected in the average formula, and therefore inflation.

OK, but which goods are these?

The institutions that calculate the inflation index create a certain basket of goods that is compared from period to period with its predecessors. The composition of the basket of services and goods is weighted by the amount of expenditure made by the citizens of a country.

In practice, this means that, as recently as March 2022, the most significant expenditure in Poland was on food and non-alcoholic beverages (approximately 26%). Rent and other household maintenance-related payments remained in second place (19%). And it was mainly these products that had an impact on the development of the inflation phenomenon in Poland. The remaining expenditure categories can be traced below.

Did you know that…

Among food products, the highest level of inflation is seen in sugar. Its price has increased by 42% compared to July last year!
Similarly, high changes can be seen in the prices of diesel (40%), gas (45%), and energy carriers (37%). It is hard not to mention at this point that less than a month ago, the Spanish government implemented legal measures aimed at reducing electricity consumption. The effective plan to combat excessive electricity consumption is to… maintain, using air conditioning, a minimum air temperature of 27°C!